CONTENTS
- 1. Labor Standards Act Dispute, Overview of the Case
- - The Plaintiffs’ Position Asserting a Violation of the Labor Standards Act
- 2. Summary of the Seoul High Court’s Determination
- - Determination on the Mandatory Closing Day Under the Distribution Industry Development Act
- - Determination on the Qualification of the “Company-Wide Employee Representative” Under the Labor Standards Act
- 3. Labor Standards Act, Daeryun’s Strategy
1. Labor Standards Act Dispute, Overview of the Case
The defendant is a corporation that operates a large retail store, and the plaintiffs are current and former employees of that store.
In 2013, the Distribution Industry Development Act was amended to require the designation of two mandatory closing days each month. From around 2012 to the present, the defendant company has reached holiday-substitution agreements each year with its “company-wide employee representative.” These agreements substitute the defendant’s employees’ paid holidays for the mandatory closing days.
Accordingly, under their employment contracts and the rules of employment, the defendant’s employees work five days per week and, of their two days off, one day is designated as a working day, while the mandatory closing day, which is a working day, is designated as a holiday.
In other words, they entered into an agreement that exchanged a holiday on which the employees have no duty to work (Day A) for a working day on which they do have a duty to work (Day B), so that the employees work on Day A but rest on Day B.
However, in 2018, Article 55 of the Labor Standards Act concerning holiday substitution was amended, and the defendant company began to implement that holiday substitution from 2020.
On the premise that the holiday-substitution agreement was void, the plaintiffs claimed holiday work allowances.
The Plaintiffs’ Position Asserting a Violation of the Labor Standards Act
- A holiday cannot substitute for another holiday, so for a lawful holiday substitution to be established, Day B must be a working day.
- However, because the mandatory closing day under the Distribution Industry Development Act is a “holiday” rather than a working day, designating that holiday as a substitute holiday is unlawful and void.
- Therefore, the defendant must pay the unpaid holiday work allowances for work performed on public holidays.
- The “company-wide employee representative” who reached the holiday-substitution agreement with the defendant company is not the “employee representative” prescribed by the Labor Standards Act.
2. Summary of the Seoul High Court’s Determination
However, as in the first instance, the second instance also dismissed the plaintiffs’ claims and their appeal.
To decide this case, the court focused its analysis on two main points.
Determination on the Mandatory Closing Day Under the Distribution Industry Development Act
First is the question of whether the mandatory closing day is a “holiday” for the employees.
Under the Distribution Industry Development Act, the mandatory closing day does have the effect of contributing to the protection of employees’ right to health by prohibiting sales to customers.
However, employees’ right to health is not necessarily promoted or enhanced only by interpreting the mandatory closing day as an additionally granted statutory holiday.
It is also not a holiday that relieves the employees of their duty to provide labor “as between the employer and the employees.” In particular, the mandatory closing day does not constitute either a contractual holiday or a statutory holiday.
In addition, granting two additional statutory holidays each month only to employees of large retail stores and quasi-large-scale stores would be disproportionate and unfair to employees of other stores.
Determination on the Qualification of the “Company-Wide Employee Representative” Under the Labor Standards Act
As to whether the company-wide employee representative who reached the holiday-substitution agreement with the defendant held lawful qualification, the court likewise took the position that the qualification was lawful.
The defendant’s employees had already, on their own initiative, elected workplace employee members, the workplace employee members elected the workplace employee representatives, and the workplace employee representatives elected the company-wide employee representative. Accordingly, the company-wide employee representative can be regarded as having democratic legitimacy.
In addition, the fact that the company-wide employee representative holds the authority of an employee representative under the Labor Standards Act is set out in the operating rules of the labor-management council, and those operating rules were also kept on hand and made known at each workplace.
In particular, with respect to the gathering of opinions and the notices conducted around the time of the holiday-substitution agreement, the company-wide employee representative had continuously reached holiday-substitution agreements from around 2012 and had given notice of this fact to all employees by email.
Finally, apart from the company-wide employee representative, there is no separate counterpart with whom the defendant company could consult on matters prescribed by the Labor Standards Act, such as the flexible working hours system, the selective working hours system, restrictions on overtime work, and the compensatory leave system.
3. Labor Standards Act, Daeryun’s Strategy
The current Labor Standards Act still does not set out specific criteria for the lawful requirements of an employee representative, so there had remained confusion among practitioners regarding the lawfulness of an employee representative.
This judgment may serve as an important case that clearly sets out the essence of the democratic legitimacy that an employee representative under the Labor Standards Act must possess, as well as the criteria for the authority of an employee representative.
If you need legal advice regarding the Labor Standards Act and the Distribution Industry Development Act, you are welcome to contact the Labor and Industrial Accident Group of Daeryun Law Firm LLP at any time.
